HP acquires Palm for $1.2 billion

The rumours of ex-leader of the PDA marketplace, Palm, being up for sale have proved true, with Hewlett Packard spending an estimated $1.2 billion on acquiring the company.

The announcement of the deal, reported over on the New York Times, results in Palm becoming a wholly owned HP subsidiary - and gives HP a big boost in the smartphone and possibly tablet PC market.

Industry pundits have been saying that Palm was a likely target for acquisition ever since the company's Pre smartphone - running Palm's critically acclaimed WebOS operating system - received a lukewarm market reception. HP, on the other hand, has been producing a variety of Windows Mobile-enabled range of iPaq smartphones for business users, also without a great deal of success.

While the deal provides a lifeline for Palm, it remains to be seen if the company can take two not-terribly-successful smartphone business units and combine them to reinvigorate both company's offerings and compete against the likes of Apple's hugely successful iPhone and the increasing popularity of handsets based around Google's Android.

The £790 million deal - which sees HP valuing Palm at $5.70 (£3.75) a share, a premium on the $4.63 valuation the company had at close of trading on Wednesday but significantly lower than its 52-week high of $18.09 - will see HP also acquiring Palm's estimated $400 million debt, which the company will pay off using Palm's cash assets.

Interestingly, HP's executive vice president for the personal systems group Todd Bradley should be well-placed to guide the successful merger of the two companies: before moving to HP in 2005, he served as Palm's chief executive officer. Palm's current CEO, Jon Rubinstein is expected to remain at the company.

It's thought that HP will continue to develop in and invest in WebOS, both for smartphones and - interestingly - for slate-format devices as well - although as yet no product announcements have been forthcoming.

Are you pleased to see Palm find a buyer, or has HP ended up with a lemon? Is WebOS the future for mobile devices, or should the company ditch it in favour of a customised vesion of Google's Android - or even Windows Mobile? Share your thoughts over in the forums.